We have a new deadline for the 50, er, 43-state foreclosure fraud settlement. It’s not July Fourth or Labor Day or Halloween, but now Christmas. More holidays have been selected for the target settlement date than have been selected for vignette-laden films directed by Gary Marshall. But this time, Tom Miller means it!

The deal, which Miller has been trying to negotiate since March, would release the five servicers – Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase, and Wells Fargo – from legal claims on past home loan servicing and foreclosures. The deal would not prohibit individuals from suing the banks, or government prosecutors from suing banks over issues related to the packaging of home loans into mortgage-backed securities.

In return the banks will agree to pay for what Miller calls “substantial principal reductions” for homeowners who are underwater, and agree to a set of mortgage servicing standards, interest rate reductions, and cash payments to some homeowners who’ve alrady [sic] gone through foreclosure.

“If what I’ve described is going to happen, this is the only way that it’s going to happen,” Miller said. “The banks aren’t going to do this on their own. The Congress is not going to be able to enact standards like this. The states can’t do it either.”

Yes, because only Tom Miller can bring the banks to heel. Look how he’s done so far!

There actually is another entity that can force banks into fair dealing and transparency with borrowers, and even mass reductions in principal or loan modifications. That would be the courts. This is the avenue used by Catherine Cortez Masto in Nevada, after a prior deal on loan modifications with Bank of America amounted to nothing. The Nevada Attorney General sued BofA and, recognizing that banks have not even stopped the robo-signing for which Miller wants to give them a broad liability release, indicted mid-level employees for falsifying documents to county recording offices. The grand jury transcripts in that case, against Gary Trafford and Geraldine Sheppard, have been released, and they show an undeniable pattern of criminality among the document processing companies that feed foreclosures into the system. Local news in Las Vegas has a great story on this:

The workers, who were employed at Lender Processing Services (LPS) under Gary Trafford and Geraldine Sheppard, admitted to forging signatures on tens of thousands of notices of default.

Most blamed fear of unemployment for their decision to forge signatures and break the law. One notary said she needed to keep her job while getting through graduate school, another said he had a family to support [...]

A criminal investigator for the Nevada Attorney General’s office said that out of tens of thousands of documents from LPS that his investigation of the fraud examined, an overwhelming majority seemed suspicious.

“It’s hard to find [a document] that you wouldn’t be suspicious of,” the investigator said, adding that legitimate documents from the company seemed to be the exception instead of the rule.

It wasn’t just the signatures that were fraudulent. According to the investigator, some of the forged documents contained information that had not been verified by those signing them. This sometimes led to the wrongful foreclosure of houses because of the innacuracies [sic].

“We’ve had individuals who said ‘I was never late in my payments, but yet my house has been foreclosed on,’” he said.

It doesn’t make sense that this would be the end of the line for Masto’s investigation, especially as she just announced a partnership with Kamala Harris in California to investigate foreclosure and mortgage fraud. One of the witnesses before the grand jury testified to getting locked out of her home without being notified of a foreclosure action, the home having been sold without her knowledge, and with her belongings still inside. Many of the belongings were eventually stolen. It’s the wild west out there, and the litigation has just begun.

In another case in a sand-state ground zero for foreclosures, Florida, the state Supreme Court resurrected a case that was actually dismissed by both parties due to a settlement, because of the implications for foreclosures throughout the state:

The high court’s ruling came in a foreclosure filed by the Bank of New York Mellon. The defendant, Roman Pino, alleged the bank filed a forged document to deceive the court. He asked the judge to penalize the bank by denying it any right to foreclose on the mortgage.

The judge denied his request because the bank had voluntarily dismissed the complaint. The 4th District Court of Appeal affirmed that decision but asked the Supreme Court to rule on the issue, certifying it as a “question of great public importance.”

Pino eventually settled, but the majority on the court wants to rule in the case, which could lead to greater clarity in the law on foreclosing based on faulty documents.

There’s another case in California regarding servicer-driven default, where Bank of America simply misclassified payments to make it look like the borrower was paying taxes and insurance through them (the borrower paid it on its own). This is fraud embedded into the software of the servicers, as they seek defaults and foreclosures for purely financial reasons.

So Tom Miller can schedule holiday-based deadlines for settlements all he wants. These lawsuits will not stop until the banks stop the criminality. And there’s a sense that judges are finally turning the corner and seeing this fraud for what it is.